Iain Duncan Smith: 'This is a change for those families that we as a Conservative government will be proud of.'
Photograph: David Gadd/Allstar/Sportsphoto Ltd./Allstar

Welfare claimants with “destructive habits” will receive their benefits on prepaid cards instead of in cash in tests to be rolled out by the work and pensions secretary, Iain Duncan Smith.

Duncan Smith said benefits should support families rather than feed drug and alcohol addiction or debt problems.

He said a system of prepaid cards would help lift families “on the margins” out of poverty because their benefits would not be spent on addictions.

The former Tory leader also announced plans to roll out the troubled flagship universal credit welfare scheme nationwide from next year.

On prepaid cards, Duncan Smith said: “I have long believed that where parents have fallen into a damaging spiral – drug or alcohol addiction, even problem debt, or more – we need to find ways to safeguard them – and more importantly, their families, their children, ensuring their basic needs are met.

“That means benefits paid, I always believe, should go to support the wellbeing of their families not to feed their destructive habits.

“To that end, conference, today I can stand here and announce to you that I am going to start testing prepaid cards onto which we will make benefit payments so that the money they receive is spent on the needs of the family, finally helping I believe to break the cycle of poverty for families on the margins.

“This is a change for those families that we as a Conservative government will be proud of.”

Claudia Wood, chief executive of Demos, said the policy was “ethically questionable and practically and technologically challenging”.

Research carried out by the thinktank two years ago found public support for the use of cards to control the spending of drink and drug addicts, gamblers and people vulnerable to financial abuse.

“However, polling shows that rolling out prepaid cards more widely for the purposes of restricting what people could spend their benefits on would be extremely controversial, ethically questionable and practically and technologically challenging,” she said.

“The government should proceed with caution by only piloting the scheme for people who need and want the additional safety net a prepaid card can offer, and must stay away from the slippery slope of wider controls.”

Duncan Smith also said he was going to finish what he started with universal credit (UC), a scheme so far blighted by cost overruns and delays.

The reform brings together six different benefits and tax credits into one payment and is currently operating in the north-west.

The nationwide rollout from early next year will ensure that claims using the old system will be closed from 2016 with full migration to UC to “follow after”, according to the Department for Work and Pensions.

Duncan Smith told the Tory party conference: “I can announce that we are going to accelerate the delivery of universal credit from the new year, bringing forward the national roll-out through 2015/16 to every single community across Great Britain.

“Secure national delivery, yet at the same time, delivering that life change at a local level – strengthening community partnerships, helping vulnerable households, getting people into a job quicker and staying in work longer, not just helping the economy but reducing child poverty as well, bringing up to £35bn in economic benefits to Britain over the next decade.”

The work and pensions secretary also announced plans to send Jobcentre staff into schools to target children as young as 15 who are at risk of falling out of education, employment or training and work with them to improve their prospects.

Duncan Smith said: “It’s my intention for Jobcentre Plus coaches in my department to work with young people in the schools across the country for the first time, from as early as 15, targeting those most at risk of falling out of education, employment or training and working with them before them they end up in that terrible wage scar, as has happened too often in the past.

“So for the first time, 15-21-year-olds will have a single package of help with support and assistance that will radically improve the hope and aspirations of a generation that the last government left behind.